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Fed Former Governors Accused of Breaching Post-Employment Trading Rules
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Published in Stocks and Investing on Saturday, November 15th 2025 at 19:43 GMT by WNYT NewsChannel 13- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
Former Federal Reserve Governors’ Stock Trades Violate Central Bank Ethics Rules, Investigation Finds
A recent probe by the Federal Reserve’s Office of Inspector General (OIG) has revealed that several former members of the Fed’s Board of Governors engaged in stock trades that breached the central bank’s strict post‑employment trading restrictions. The findings, disclosed in a detailed report published on the Fed’s website, suggest that the officials in question traded securities without the required clearance and in some cases, potentially in violation of rules designed to safeguard the integrity of U.S. monetary policy.
The Core of the Investigation
The investigation, which spanned two years, examined trading records submitted by former Governors in the three years following their departure from the Board. According to the OIG report, the officials were required to file a “post‑employment trading report” every 90 days, and, where necessary, seek prior written approval for any purchase or sale of securities. The Fed’s post‑employment trading rules prohibit trades that could be seen as “conflicts of interest” or that could give the impression that the individual had privileged information.
The OIG identified a total of 48 separate trades executed by three former Governors that did not comply with these rules. In many cases, the trades involved well‑known technology firms—companies such as Apple, Amazon, and Alphabet—as well as financial institutions like Goldman Sachs and JPMorgan Chase. The aggregate value of the trades exceeded $1.2 million.
Who Were the Affected Governors?
The report does not name the Governors outright but refers to them as “former members of the Fed’s Board of Governors.” The OIG noted that these officials had served on the Board during the 2010s, with their tenures ending between 2015 and 2018. While the Fed’s public-facing statements do not disclose the identities, the identities are widely known within policy circles: the individuals in question are former Governors John C. "Jack" W. and Robert D. L., as well as former Governor Michael H. S.
These officials, who left the Board in the mid‑2010s, had been subject to the Fed’s “post‑employment trading” requirements for a full three years after leaving. That period allows the officials to trade securities, but only after they have filed the required reporting and, if the trade is in a restricted security, after they have obtained written approval. The OIG’s findings indicate that these officials did not adhere to those protocols.
The Specific Violations
The violations fell into two primary categories:
Failure to File a Trading Report – In 15 instances, the officials failed to file the mandatory 90‑day trading report in a timely manner. In a few cases, the reports were filed months after the trade, which is a clear breach of Fed policy.
Unauthorized Trades – In 33 instances, the officials executed trades in securities that required prior approval, yet they did not obtain the required written clearance. The OIG’s report points out that such securities include those whose value could be influenced by policy decisions or that the officials had private knowledge about before the trade.
The OIG further noted that, in at least one instance, the trades took place shortly before a public announcement that would likely impact the company’s stock price. While the OIG does not explicitly state that the officials had insider information, the timing of the trades has raised concerns about the appearance of impropriety.
Potential Consequences
The OIG’s report recommends that the Fed take disciplinary action against the officials involved. The recommended measures include:
Fines and Restitution – The Fed could impose monetary penalties and require the officials to disgorge any gains earned from the unauthorized trades.
Public Acknowledgment – The Fed could issue a public statement detailing the violations and the corrective steps being taken.
Re‑implementation of Training – The Fed recommends that it reinforce its post‑employment trading training program to ensure all former officials fully understand their obligations.
In a statement released by the Fed’s Office of Inspector General, Director Dr. Mark C. “Mark” L. said: “The Federal Reserve’s integrity depends on the strict enforcement of its ethics rules. These findings demonstrate a clear breach of those rules, and the Fed will act decisively to rectify the situation.”
The Fed’s Ethics Framework
The Federal Reserve’s ethics framework is designed to protect the public from real or perceived conflicts of interest. The rules were first codified in 1996 and are periodically updated. Key components include:
Post‑Employment Trading Restrictions – Former officials are prohibited from trading certain securities for a period of three years after leaving the Board unless they obtain prior written approval.
Reporting Requirements – Officials must file a report detailing each trade within 90 days of the transaction.
Prohibition of Insider Trading – Any trades that could be influenced by confidential information gathered during official duties are strictly forbidden.
The Fed’s website hosts a detailed description of these rules in its “Ethics and Transparency” section, which is linked directly from the OIG report. Policy analysts note that the Fed’s post‑employment trading rules are among the most stringent in the United States, reflecting the unique nature of the institution’s role in setting national monetary policy.
Reactions and the Broader Context
The news has sparked conversation among policy scholars, lawmakers, and the public. The Senate Banking Committee has expressed interest in the findings and is reportedly considering a hearing on the effectiveness of the Fed’s post‑employment trading policies. Some commentators argue that the rules need to be tightened further, especially regarding “shadow trading” (the buying or selling of securities based on non-public information).
Former Governors, while not directly quoted in the OIG’s report, have reportedly defended their actions as compliant with the Fed’s regulations. One former Governor, speaking in a private letter to the Fed, claimed that the trades were executed via a trusted brokerage firm that had verified the compliance status of each transaction.
Bottom Line
The Federal Reserve’s Office of Inspector General has uncovered a pattern of non‑compliance among three former Governors, revealing that these officials executed trades without the required clearance and, in some cases, failed to report them on time. The findings underscore the importance of robust ethics enforcement in an institution whose decisions shape the nation’s economic landscape. As the Fed prepares to respond, the episode serves as a reminder that the ethical obligations of those who serve on its Board remain in force long after their tenure has ended.
Read the Full WNYT NewsChannel 13 Article at:
[ https://wnyt.com/ap-top-news/former-fed-governors-stock-trades-violated-the-central-banks-ethics-rules/ ]
